Nail your pricing strategy for 2025
Apologies for sending this a day late. Bali last week had me deep in writing Wantrepreneur (spoiler: it's shaping up to be something special).
I was in conversation with an experienced founder the other day. We were vibing and she loves the approach I’ve built with my Exit Ready program. Reaching the logical part of the conversation she paused and asked:
“What does it cost?”
Which immediately fired my synapses. My internal dialogue went: “Cost? That’s internal. The price is what I charge.
Price.
Cost.
Benefits.
Value.
These simple terms carry so much meaning and also confusion: getting it wrong could ruin your business. I want to break them down as it can help one see opportunities for impact.
Price = what the customer actually agrees to pay. The bundle of goods and services you’re providing for the total sum of money the customer believes they’re worth. The crux being the amount they believe worthwhile to remove that specific pain. Price is a signal to the market. If you’re charging what you’re worth, customers see that as confidence in your offer.
Cost = the sum total of the expenses and products that you, as supplier, will bear in the provision of the above bundle provided to the customer. Cost goes beyond just dollars and cents. It’s everything you bear so your clients don’t have to. Consider it the investments, resources, and experience you pour in behind the scenes. When your client pays, they’re not seeing the late nights, the team’s effort, or the strategic planning; all that is the cost you absorb to create a seamless experience and outcome.
Benefits = the specific advantages received by the customer, that are important to her (it's subjective, not objective). Those real, tangible wins that resonate with their needs and ambitions. In my Exit Ready program, it’s not ‘exit planning’; it’s clarity and freedom. Benefits aren’t features; they’re the transformational elements that the client truly values and would struggle to find elsewhere. This subjective impact on their lives is what makes your offering indispensable.
Value = Benefits LESS price. Benefits that the customer cares about. Exceeding their expectation of value is the key to long-term success, client loyalty, and a stellar reputation. When customers feel they’ve received more than they paid for, that’s value—and that’s what keeps them coming back, referring others, and even increasing your exit value in the end.
Stating the obvious, your value should exceed the price paid, and the price should be higher than the cost. This leaves room for profit. I'm writing this as I see broad misuse of the terms.
If value < price = disappointed customer
If price < cost = broke vendor
When price << value = huge success
When price doesn’t cover costs, you’re bleeding resources. Cutting prices may attract business initially, but it’s unsustainable and weakens your business’s appeal to buyers.
This reminds me of a fascinating conversation I had with Miles Valentine on Two Commas (listen to the whole episode on Spotify or Apple). After selling his company, the new owner made a huge decision: they doubled the maintenance prices overnight. Miles initially objected, fearing backlash, but the result was astonishing—they lost just two customers. This move not only highlighted the undervaluation of their services but also demonstrated how a confident pricing strategy can reshape profitability.
Think your pricing might be leaving money on the table? Let’s fix that together.
Reply here or hit me up if you want to talk about pricing or any other strategy into 2025!
Cheers,
Josh
